Social Security is a financial backbone for many United States retirees. The program was created to help support American seniors with guaranteed monthly income. Today, it’s just as integral to the financial health and security of our nation as it was almost a century ago.
Roughly 66 million U.S. residents collected social security in February 2023, notes the Center on Budget and Policy Priorities. According to the National Institute on Retirement Security, 40% of older Americans rely solely on social security for retirement income.
Given the importance of this program, there are many things that are helpful to know about Social Security. Below are 10 essential facts to learn as you prepare to enter retirement and begin claiming Social Security.
Social Security Has Age-Based Requirements
Social Security eligibility is based on several factors, the primary one being age. People become eligible to claim Social Security benefits when they turn 62. However, the full retirement age, as defined by the Social Security Administration (SSA), is 66. To claim maximum benefits, workers should wait until age 66 to retire. Those who wait until age 70 can claim more than the standard maximum benefit.
You Don’t Need to Stop Working to Claim Social Security
You can continue to work during retirement. However, there are caps to how much you can earn while collecting Social Security benefits. In 2023, workers under the full retirement age of 66 can collect benefits if they earn less than $21,240 per year. Earning more than that can impact your benefits payout.
Social Security Payments Aren’t the Same for Everyone
The amount you can claim in Social Security benefits depends on the amount you paid into the system throughout your working years. More specifically, the SSA uses a formula to calculate your exact benefits. The formula primarily considers your average indexed monthly earnings (AIME), which are your best-paid 35 working years averaged. This factor, combined with others, such as your age at retirement, will determine your monthly Social Security benefit amount.
You can calculate your estimated monthly benefits at Social Security Online.
You Don’t Have to Be a U.S. Citizen to Get Social Security
Certain non-citizens are qualified to receive Social Security benefits. These include lawfully permitted U.S. non-citizen residents and certain refugees and asylum seekers. You can review a full list of qualified non-citizens at SSA.gov.
Benefits Last a Lifetime
You are entitled to your full Social Security benefits from the day you start claiming them until the end of your life. Social Security was designed to protect retired Americans from financial insecurity.
Social Security Is Taxable
Up to 85% of your Social Security income benefits are taxable if you meet certain criteria defined by the SSA. These are based on your filing status and your income. If you file as an individual and make more than $34,000 per year, you may have to pay taxes on 85% of your income. The same rate applies to couples filing jointly and making more than $44,000 per year. Individuals earning less may need to pay taxes on 50% of their Social Security income.
Applying for Social Security Is Simple
You can apply for your Social Security benefits through a simple online form. You do need to provide some basic information about yourself and your work history, along with some documentation with proof of your past income.
You Can Collect When Your Spouse Passes
If you die, your spouse or children may be eligible to receive your Social Security benefits. This even holds for divorced spouses in some cases. Eligibility is based on income and other factors.
You Can Work 35+ Years for Best Results
Your Social Security benefits are calculated based on your highest paying 35 working years. So working at least this many years will ensure that you take a step towards maximizing your benefits.
Social Security Is Reliable
Some folks don’t have faith in the Social Security system. But did you know that Social Security has never missed a payment? Since day one, the Social Security program has been there for retired Americans, and the system continues to work.
Resource Links
“Policy Basics: Top Ten Facts about Social Security” via the Center on Budget and Policy Priorities
“Income Taxes and Your Social Security Benefit” via the Social Security Administration
“New Report: 40% of Older Americans Rely Solely on Social Security for Retirement Income” via the National Institute on Retirement Security
“Social Security Benefit Amounts” via the Social Security Administration
“Survivors Benefits” via the Social Security Administration
“As Social Security marks a milestone, here are 3 things to know about your retirement benefits” via CNBC